General Agreement on Trade Related Services

General Agreement on Trade-Related Services (GATS) is a treaty created by the World Trade Organization (WTO) that governs international trade in services. It covers all services, including banking, insurance, telecommunications, and transportation services, among others.

The primary objective of the GATS is to promote trade in services by removing barriers and creating an open and transparent framework for the provision of services across borders. The agreement seeks to create a level playing field for all countries, regardless of their level of development or size.

The GATS establishes a set of rules that govern the trade in services. These rules cover areas such as market access, national treatment, and most-favored-nation treatment. Market access refers to the conditions for foreign service suppliers to enter and operate in a domestic market. National treatment refers to the treatment of foreign service suppliers in a domestic market, which should be no less favorable than the treatment given to domestic service suppliers. The most-favored-nation treatment requires WTO members to treat all other members equally, which means that any advantage granted to one member must be extended to all members.

Countries are also allowed to make commitments to liberalize their trade in services through the GATS. These commitments may include the opening up of new markets, the removal of restrictions, and the elimination of discriminatory policies. These commitments are known as schedules of commitments, which are lists of specific services sectors where a country promises to provide market access according to specific conditions.

GATS has been implemented since 1995 and has played a significant role in the growth of international trade in services. According to WTO statistics, the share of services in global trade has risen from 17% in 1995 to around 25% in 2019, and the value of services trade has increased from $1.35 trillion to $5.8 trillion during the same period.

However, there are also challenges in implementing the GATS. One challenge is that many countries have not made sufficient commitments to liberalize their trade in services, leading to limited market access for foreign service suppliers. Another challenge is that some sectors, such as health and education, are sensitive, and countries may be reluctant to open up their markets.

In conclusion, the GATS is an essential agreement that promotes international trade in services, and it has contributed significantly to the growth of the services sector. However, more efforts are needed to further liberalize trade in services, and countries need to work together to address the challenges in implementing the agreement.